Shootin' the Bull about shoulders

“Shootin’ The Bull”

by Christopher B Swift

6/15/2026

Live Cattle:​

Well, higher or lower, the right shoulder is built, in the final stages of, or actually nonexistent.  Finding out is the next most probable move.  There is a great deal of room between today's close and contract high.  There isn't much standing in between these two factors either.  The widening of basis spreads continues to place more of the risk of potential adverse price fluctuation on to the producer. I recommend a detailed review of what you have on feed, exposure to, and use the current formation of what may be the right shoulder of a Head & Shoulders pattern. If analysis is correct, downside targets would be the lows made in November of '25. 

Corn has plummeted.  While maybe not blood on the streets, corn is hemorrhaging badly. While doing such, consider a price for corn, this time next year, that you don't want to pay and own the call options at that strike price.  Business decisions are difficult enough, so when they are so much in your favor, consider doing something about it.   

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​​​​Feeder Cattle: ​

Cattle feeders continue to see spreads in futures contracts widen the starting margins further in a negative manner.  Feed costs are expected to be of benefit, but only if captured, or they continue to move lower.  The focus for the moment is on producers that will be marketing inventory into the upcoming video sales.  Considering the price gains of the year, these cattle should have considerable profit margin.  This leads to how much of that is one willing to risk to either not have to pay for price protection, or pay to make sure the lion's share is still available on sale date. For those marketing inventory on the video sales, I recommend buying the at the money August put option, and nothing else.  If prices continue to move higher, the option decay will lessen as price moves higher, and helps to assure you of the higher cash trade.  If prices move lower, the option premium will increase as prices move lower, and helps to assure you of the higher, predetermined price you chose to market at previously. 

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All other cattle to be marketed, as close to the expiration of the futures contract, are recommended to be done so with an at the money put option, with expectations of selling a call or put, depending upon direction, to help reduce the initial premium paid for the put option.  August feeder cattle futures, between today's close and $365.00 would allow for option strategies to be created that would produce marketing prices at, near, or above historical index reading, all the while flooring a minimum sale price that may or may not be grossly exceeded.  Many have taken the Head & Shoulders pattern lightly.  While there is no way to determine its validity, prior to completion, I wouldn't want to admit it was ignored if materializes.  If correct in this pattern recognition, downside targets would the November low's of '25 per respective contract month.   ​

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​​​​Corn:

I don't know if "the" bottom or "a" bottom, but either one is expected to push corn off contract lows for a day or two.  On this large of a price decline, and capabilities of options strategies, producers can fix prices, deep into the future, with considerable leeway, were prices to move lower.  Like the corn, I am unsure of a bottom or not, but do believe there will be some higher trading to take place in beans and wheat, even if going to move lower.  Due to the significance of losses, a hefty correction will not be out of the ordinary.  

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Energy:​

​Energy was sharply lower as military action deescalates in the middle east. With this, topping off farm tanks may not be needed, and with the inverted carry charge, farmers will more likely be paying less for fuel at harvest than planting.  All of this is stated with great reservations due to gravity of the situation and not much faith in Iran's promises.  

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Bonds:

​Bonds were higher.  There may not be much to the bond market for months, as the President likes inflation and there is nothing being done to curtail it from a government spending standpoint.  Commodity inflation may subside, but would still take a while to achieve previous lower levels. 

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​​​​​​​​​​ “This is intended to be or is in the nature of a solicitation.”  Futures trading is not for everyone. The risk of loss in trading futures can be substantial; therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Past performance is not indicative of future results, and there is no assurance that your trading experience will be similar to the past performance.

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